Parliament has the constitutional right to levy taxes and
authorize government expenditures. This means that all
expenditures must be charged to appropriations that have been
approved by Parliament; all revenues must be deposited in the
Consolidated Revenue Fund; and an accurate and complete
accounting for expenditures and revenues must be made to
Parliament. The policy that is described in this chapter requires
non-monetary transactions (bartering) to be charged to an
appropriation in the same manner as monetary transactions,
thereby bringing non-monetary transactions within the
parliamentary control framework.
Managers are responsible for carrying out their programs with
due regard for economy, efficiency and effectiveness. The policy
result in the same decision-making framework being applied to
non-monetary transactions as to monetary transactions. A
non-monetary transaction that brings greater benefits than its
monetary equivalent will be worth pursuing. On the other hand,
there will be a disincentive to pursue a non-monetary transaction
that is not as good as its monetary equivalent.
Accounting illustrations are included in Receiver General
directive 1994-3.
Appendix A contains relevant definitions.
To enhance parliamentary control and to improve accountability
for, and disclosure of, federal government non-monetary
transactions.
It is government policy that non-monetary (bartering)
transactions be recorded in the accounts of Canada as if they
were monetary transactions.
This policy applies to all organizations considered to be
departments within the meaning of Section 2 of the Financial
Administration Act (FAA).
Departments must establish procedures to ensure that:
- non-monetary transactions which take place between the
Government of Canada and an outside party, such as a Crown
corporation or the private sector, are charged to their
appropriation and are accounted for in the accounts of Canada as
if they were monetary transactions when their fair value exceeds
one hundred thousand dollars ($100,000);
- non-monetary transactions within the Government of Canada
which take place between programs are accounted for in the
accounts of Canada in a manner consistent with the
interdepartmental charging policy when their fair value exceeds
one hundred thousand dollars ($100,000); and
- a clear audit trail exists for all non-monetary transactions,
regardless of whether they are subject to the accounting
requirements of this policy.
For purposes of this policy, the one hundred thousand dollar
($100,000) limit mentioned above applies to: single transactions;
the total fair value of a group of related transactions; and the
present value of a series of related transactions which occur
over a number of years.
The correct and prompt recording of non-monetary transactions
should be verified by the departmental internal audit group on a
regular basis. Audits should also examine the propriety of such
transactions.
This policy is issued under the authority of the Financial
Administration Act, Section 7(1)(c).
Cancellation
This chapter cancels chapter 6-14 of the "Financial
Management" volume dated August 1, 1993.
Enquiries concerning this policy should be directed to
departmental headquarters. For an interpretation of this policy,
departmental headquarters should contact:
Comptroller Sector
Program Branch
Treasury Board Secretariat
Ottawa, Ontario
K1A 0R5
Telephone: (613) 957-7233
Facsimile: (613) 952-8772
1. Non-Monetary Transactions
The term "barter" is often used to describe this type of
transaction. Non-monetary transactions are exchanges of
non-monetary assets, liabilities or services for other
non-monetary assets, liabilities or services. A non-monetary
transaction can also occur as part of a larger transaction
containing both monetary and non-monetary considerations.
Examples of assets and liabilities that might form part of a
non-monetary transaction include, but are not limited to:
tangible assets such as real property, machinery and inventory;
intangible assets such as rights or privileges; and liabilities
such as the obligation to provide future services.
Cost-shared projects, where a government program cooperates
with another party toward a common goal, are not considered to be
non-monetary transactions. Neither are trade-ins, because
typically the value received for the trade-in is a small
percentage of the total value of the transaction.
2. Fair Value
This is an amount that would be agreed upon by informed
parties dealing at arm's length in an open market.
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